Critical times in Pacific tuna

Islands Business Magazine interviews Andrew Wright, Executive Director of the Pohnpei-based Western and Central Pacific Fisheries Commission (WCPFC). Better known as the Tuna Commission, the WCPFC is linked to management and conservation of the Pacific’s tuna resources.


Wright…ensuring sustainable tuna stock in Pacific waters

By Dionisia Tabureguci


After years of gestation, the Western and Central Pacific Fisheries Commission (WCPFC) was finally set up in 2004 to “bring together all those with an active interest in the tuna resources of the Western and Central Pacific Ocean (WCPO) in an effort to work collaboratively for the effective management, long-term conservation and sustainable use of tuna stocks in this region,” says executive director Andrew Wright.

As an organisation therefore, the Tuna Commission—as it is more commonly referred to—is a meeting point for countries that own tuna fishing grounds in the Pacific and countries that are not from the region but who come here to fish. In fishing speak, the latter are more commonly known as Distant Water Fishing Nations (DWFNs).
More specifically, they include fishing boats from Asia, Europe, South America and to a lesser extent Australia and New Zealand.



Together, DWFNs are documented to haul out more fish from the Pacific Ocean than what the Pacific islands nations themselves do and therefore, their role in the management and conservation of the Pacific’s fish resources is considered very important.

Over the years, concerns have been expressed over the Pacific’s tuna resources and how they have been exploited—or overexploited as some believe—especially by DWFNs, as well as vessels that engage in Illegal Unreported and Unregulated (IUU) fishing.

Such a scenario would put an oversight organisation like the Tuna Commission under pressure to ensure the interests of its regional members are protected.

WCPFC members are—Australia, China, Canada, Cook Islands, European Community, Federated States of Micronesia, Fiji, France, Japan, Kiribati, Korea, Republic of Marshall Islands, Nauru, New Zealand, Niue, Palau, Papua New Guinea, Philippines, Samoa, Solomon Islands, Chinese Taipei, Tonga, Tuvalu, United States of America and Vanuatu.

Its participating territories are American Samoa, Commonwealth of the Northern Mariana Islands,French Polynesia, Guam, New Caledonia,Tokelau andWallis and Futuna, while Indonesia is a cooperating non-member.

ISLANDS BUSINESS MAGAZINE: What was the idea behind the setting up of the Western and Central Pacific Fisheries Commission – just a brief summary of its role in the areas of tuna conservation and management?

WRIGHT: The origin of the WCPFC can probably be best traced to the Rio Earth Summit and international concerns at that time relating to the lack of institutional mechanisms to manage and conserve marine resources in areas beyond national jurisdiction i.e. on the high seas.
This was at a time of significant conflict and concern over high seas fishing – including in the South Pacific in relation to driftnet fishing.
At that time the Secretariat of the Pacific Community (SPC) undertook scientific work and research on regional tuna stocks and the Forum Fisheries Agency coordinated administrative arrangements among its members – focusing on their relations with distant water fishing nations for fisheries access.
Despite considerable political pressure from several distant water fishing nations FFA chose not to include them among its membership.
While this proved to serve the FFA member countries well it also meant that there was no institution that was responsible for conserving and managing tuna fisheries in the WCPO.
Those responsible for the establishment of the FFA in the mid-70’s were fully aware of this and knew that, in order to establish effective management arrangements for regional tuna stocks, at some point in the future they would need to develop additional institutional arrangements that would involve the distant water fishing nations.
It wasn’t until a new international Convention, known as the UN Fish Stocks Agreement, that was a supplement to the 1982 UN Convention on the Law of the Sea, and dealt specifically with highly migratory fish stocks such as tunas), was negotiated in 1995 that Pacific Island countries felt it was time to start engaging distant water fishing nations in discussions on what collaborative arrangements might be possible.
So between 1994 and 2004 Pacific Island countries and territories and fishing nations entered a long negotiation firstly to agree to the text of a new international convention that established the WCPFC – and then to start to flesh out the administrative and other supporting procedures and processes that would make it work.
All that work was completed in June 2004. So the WCPFC brings together all those with an active interest in the tuna resources of the Western and Central Pacific Ocean (WCPO) in an effort to work collaboratively for the effective management, long term conservation and sustainable use of tuna stocks in this region. This is, in effect, the objective stated in the WCPF Convention.

ISLANDS BUSINESS MAGAZINE: What are some pertinent issues right now on the conservation and management of tuna? What may be some challenges faced by the Commission in carrying out its task to help conserve tuna stocks for its member countries and the progress made in dealing with these challenges?

WRIGHT: This is a hard question because the challenges are different depending on who you speak to.
Apart from the challenges caused by rising oil prices, which impacts on everyone involved in the fishery, for many years the coastal States in the region, effectively the FFA member countries and the American and French territories, have aspired to develop their domestic tuna fishing industries.
At the same time, distant water fishing nations are anxious to secure long term access to the fishing grounds to support the activities of their national fleets.
Balancing these interests is proving challenging. Pacific countries are becoming increasingly actively engaged in the fishery.
I think there are mounting pressures for the distant water fishing nations to change traditional ways of operating, which were essentially over-the-horizon modes of fishing with minimal engagement or investment in shore-based services in the region, to one where local investment is probably going to determine access to long term fishing opportunities.
Of course, an overarching concern is being able to support the development aspirations of Pacific island countries and territories without jeopardising the ability of regional tuna stocks to sustain fishing – it is not much use promoting development, securing major investment, which most tuna fishery development initiatives require, and find that tuna stocks become over exploited and so jeopardise those investments.
The objective of the WCPF Convention acknowledges the need to ensure our fish stocks are used sustainably. I think this is a second major concern, managing fishing effort throughout the WCPO within sustainable limits.
The scientists have been telling us for some time that bigeye tuna, and to a lesser extent yellowfin tuna, are probably being over-fished and that these stocks will not be able to support such high levels of fishing indefinitely.
Unfortunately, the indications in 2007 are that fishing effort in the purse seine fishery is expanding – and new vessels continue to enter the fishery. Excess capacity, or when the catching power among all vessels in the fishery exceeds that which can support sustainable fishing operations, is a major concern in nearly all fisheries around the world.
In some cases it is supported by Governments which provide subsidies to vessels to enable them to continue uneconomic operations and it invariably leads to industry pressure being applied in management organisations like the WCPFC to take decisions that don’t limit catch or fishing effort when over-fishing is obviously occurring.
This results stocks becoming over-fished and collapsing. World fisheries are littered with examples of this. I would hate to think we in the WCPFC will not learn by those experiences.
Now some of the island countries, those making up the grouping known as the Parties to the Nauru Agreement, have developed a tool to manage purse seine fishing effort within their national waters.
This tool, known as the Vessel Day Scheme (VDS), is scheduled to become operational on 1 December 2007. It is quite a complicated arrangement which involves close coordination among the eight PNA members to manage purse seine fishing effort within agreed limits.
If the limits are adhered to there is potential to leverage a significant premium for access to national waters of the PNA – particularly if competition for access increases as the purse seine fleet grows.
However, ineffective implementation of the VDS, particularly in relation to an inability to constrain effort by granting access to whoever wants it will be detrimental for regional tuna stocks – and place investments in the fishery and associated contributions to the economic development of Pacific Island countries in jeopardy. Fisheries all over the world are now also required to make a major effort to minimise the impact of fishing operations on non-target fish or other marine animals that are caught incidentally during fishing operations.
The WCPFC is working at addressing this for WCPO tuna fisheries – focussing at this stage on sea birds, sea turtles and sharks. A fourth major challenge is making sure all those involved in the fishery participate fully in the work of the Commission. This includes providing full and accurate data on the operations of their fishing vessels in the Convention Area and also establishing effective control over those vessels – so applying and implementing the decisions of the Commission aimed at supporting conservation and management.
The biggest challenge in relation to this at present is in the west of the Convention Area, in the region of Indonesia, Philippines and to a lesser, but growing extent, Vietnam. Tuna fisheries in that region account for and estimated 25% of the total WCPO tuna catch – yet detailed information for the various fisheries in that region is poor and control over fishing vessels generally inadequate.

ISLANDS BUSINESS MAGAZINE: Is the WCPFC the only organisation involved in tuna fisheries management in the Pacific? If not, what is the role of the WCPFC relative to that of the other organisations?

WRIGHT: There are two other dedicated tuna regional fisheries management organisations with Pacific Ocean responsibilities. The Commission for the Conservation of Southern Bluefin Tuna is, as the name suggests, dedicated to southern bluefin – which is a temperate water fish found in southern waters of the Pacific and the Indian Ocean.
In the Eastern Pacific, the Inter-American Tropical Tuna Commission has a very similar role to that of WCPFC – where its responsibilities extend westward towards the WCPO to the eastern waters of Kiribati and French Polynesia. Any further west is the area of the WCPFC.
Tuna fisheries in the WCPFC area account for 51% of the global supply of tunas to world markets – and 78% of the total Pacific Ocean tuna catch. WCPFC has formalized relations with both IATTC and CCSBT, we exchange information with them regularly and participate in each other’s meetings.

ISLANDS BUSINESS MAGAZINE: What sort of networking does the Tuna Commission do in order to fulfill its mandate?

WRIGHT: We are required to establish and support networks that focus mainly on communications and information exchange with the 33 countries, the fishing entity of Chinese Taipei and territories that make up the current membership of the Commission, other fishing States with activities in the WCPO, a range of other inter-governmental organizations such as IATTC and CCSBT, the fishing industry from all over the globe and non-government agencies with an interest in WCPO tuna fisheries. It’s a full time job!

ISLANDS BUSINESS MAGAZINE: There is another existing establishment in the Pacific (FFA) that looks after the interest of tuna fishing in the Forum member countries? Do the two organisations work together? Or how complementary are their roles?

WRIGHT: I'm happy to say that WCPFC works very closely with both the FFA secretariat in Honiara and the SPC Oceanic Fisheries Programme (SPC-OFP) in Noumea.
Both SPC and FFA played a central role throughout the negotiations to establish the WCPFC. The FFA Secretariat’s provision of technical and policy advice to FFA members has certainly provided considerable support to their participation in the Commission.
The need for this support is likely to continue for the foreseeable future as the work underway in the Commission does place significant strain on generally under-resourced national fisheries administrations.
The SPC-OFP has been the region's main tuna research body assisting its members with fishery monitoring programmes, maintaining a regional tuna fisheries database and providing scientific support for national and regional management for more than 30 years.
The WCPFC has benefited from this in that many of the required data collection systems and historical databases were already established and being administered by SPC - we didn't have to start from scratch. The WCPFC now contracts the OFP to provide data management and stock assessment services for the WCPFC Convention Area as a whole. This is a mutually beneficial arrangement, as it avoids duplication and complements the SPC-OFP work in its member countries.

ISLANDS BUSINESS MAGAZINE: Sometime back, you raised concerns on the rise in illegal fishing vessels in Pacific waters and the shift of South American vessels from Eastern to Central Pacific.
Is illegal fishing in the WCPO increasing - if so, why?

WRIGHT: Yes, and I am still concerned about that. Illegal, unregulated and unreported (IUU) fishing is a concern to fisheries management agencies everywhere. Given the general deterioration of fish stocks in other oceans, the relative productive fishing grounds here, the large geographic area covered by the WCPO and a limited capacity to carry out monitoring and surveillance throughout this region the WCPO probably experiences very high levels of IUU fishing.
This not only involves fishing by fleets which do not participate in the work of the Commission but no doubt includes the activities of some vessels that belong to members of the Commission – particularly in respect of, for example, the under-reporting of catches. The challenge with IUU fishing is that, because it is generally unreported, we really do not know the extent of it.
Some experts estimate it could account for an additional 10% on top of the estimated reported catch – so for the WCPO that could amount to an additional 200,000 metric tonnes of tunas that are harvested each year in the WCPO that we know very little about! Not only does IUU fishing result in lost revenue opportunities, but those operations do not provide data to assist in assessing the status of local fish stocks and they undermine the sacrifices that those that comply with the decisions of the Commission make in their efforts to achieve sustainable use.
In relation to the migration west of some Latin American vessels as a result of poor fishing conditions in the eastern Pacific, yes, we have received reports of illegal activities from the zones of both Cook Islands and French Polynesia and of course the majority of their activities on the high seas are unreported.
In addition, the licensing of some of these vessels by any FFA member is in contravention of agreements both within the FFA (which relates to the licensing of vessels that are not on FFA’s Regional Register of Foreign Fishing Vessels) and within the Commission (and an undertaking not to support the activities of vessels in the WCPO that are not flagged to a member of the WCPFC). This creates some major challenges for this organisation – that will hopefully be addressed at its meeting in Guam in December.



ISLANDS BUSINESS MAGAZINE: How does a vessel get permission to fish in the WCPO? Why haven't the Latin American vessels requested permission to fish?

WRIGHT: Firstly, to operate on the high seas in the WCPF Convention Area, members of the Commission need to officially authorize each of their vessels and provide the vessel details to us so that we can place the vessel on the WCPFC Record of Fishing Vessels.
This then establishes that the member is taking responsibility for that vessel when it is operating in the WCPF Convention Area. Within the WCPFC rules, there’s no capacity to authorize a vessel unless you are a member of the Commission. I guess the Latin Americans know this and that is why they have not applied to have their vessels placed on the WCPFC Record of Fishing Vessels.

ISLANDS BUSINESS MAGAZINE: What is the Commission doing to try and better regulate fishing in the WCPO?

WRIGHT: The Commission’s efforts to better regulate fishing fleets includes the development and implementation of a satellite-based vessel monitoring system for vessels operating on the high seas that will complement that being managed by the FFA secretariat for vessels operating in the national waters of FFA members, the development of a regional observer programme that will involve the placement of observers on fishing vessels operating in the region to collect independent information, procedures to support the boarding and inspection of fishing vessels on the high seas, procedures to verify transhipment when vessels transfer their catch to other vessels such as carriers, means to more effectively encourage compliance with the decisions of the Commission including means to deter the support of any activity associated with IUU fishing and efforts to improve the detail and scope of data that is provided by fishing vessels in respect of their fishing operations.

ISLANDS BUSINESS MAGAZINE: Why are the Latin American vessels, which normally operate in the Eastern Pacific, shifting to the central Pacific? Why the depressed fishing conditions? Something to do with climate change, etc?

WRIGHT: Yes, IATTC scientists have been advising that tuna stocks in the eastern Pacific Ocean (EPO) cannot sustain current levels of fishing capacity and have been calling for a reduction in capacity among the fleets active there for many years. Good fishing conditions were experienced earlier this decade, as a result of strong recruitment to the fishery of juvenile fish, and fleets expanded in response. Now fishing conditions have returned to more long-term average conditions and there is a need to establish tighter fishing effort controls so that fishing operations are closer to that which can be sustained, some EPO fleets have moved west into the WCPO.
This highlights one of the most significant challenges shared among all RFMOs managing tuna at present. An inability to secure agreement among all those who are fishing tuna stocks to cut back on their fishing effort when scientists advise stocks are threatened with over-exploitation. It appears no-one is willing to take hard decisions that will lead to fleet reductions. It cannot go on indefinitely. Perhaps only a major crisis, such as a complete collapse of stocks, will force people to take the responsible action required to establish sustainable fisheries. If it gets to that stage, some fleets, and some economies, including Pacific Island economies, are going to suffer considerable hardship.

ISLANDS BUSINESS MAGAZINE: A recent paper by Professor Tom Kompas of the Australian National University titled "Tuna Resource Management: Economic Profit and Optimal Effort in the Western and Central Pacific Tuna Fisheries" (an article on this was featured in a recent issue of our magazine) warned of the dangers of the region being over-exploited by exposure to more open foreign fishing vessel access and the use of effective modern technology.
I notice that concern over these two factors have been raised in the past. A cover article in the May 2005 edition of Islands Business magazine carried a story of how new technology in catching fish was a growing concern for some as it was raking out juvenile fish from the Pacific ocean. It would be interesting to talk a bit more about just how tuna fishing technology has developed, what are some of the new age equipments (compared to say, the 80s), the capabilities of new technologies and what are the implications of technological advance in the tuna fishing industry. On the increase in open access, what has been the noted trend?

WRIGHT: In the early 1980s the average purse seine vessel was catching 3,500 mt in a good year – around 15 metric tonnes per fishing day. Today, although small vessels still harvest this amount, larger, high-tech vessels are averaging closer to 30 mt/day and 8,500 mt a year. Some vessels now operate almost continuously for 3 or 4 years before going for major maintenance on a slip.
Other than the Japanese seiners, which supply niche markets in Japan, most seiners transship their catch to carrier vessels on the fishing grounds rather than undertaking long voyages to deliver their catch to distant canneries or home ports. In places, like Solomon Islands and Papua New Guinea, canneries have been established close to the major fishing grounds – which also results in increased periods fishing. Modern seiners have sophisticated equipment such as bird radars (to detect birds associated with schools of fish), side scanning sonar that can extend several thousand meters each side of the vessel, helicopters and sensitive depth sounders and fish finders. In addition, in the last decade there has been an increase in the use of man-made rafts or fish aggregating devices (FADs) and fishing on naturally occurring logs which aggregate schools of tuna. Not only does FAD fishing generally result in higher catch rates of tuna but tuna schools associated with FADs generally consist of smaller, juvenile bigeye.

ISLANDS BUSINESS MAGAZINE: It has been suggested that the Pacific go into value-adding and go to the world market as a collective body to market their tuna and to cut down on the politics involved. This suggests that PICs could very well handle their tuna industry much better than they do now, not just in conservation and management but in marketing as well as development of the industry. What do you think of this opinion and what is your reading of the Pacific tuna industry so far and how it has contributed to development of Pacific islanders?

WRIGHT: Approximately 45% of the WCPO tuna catch is taken from within the exclusive economic zones of FFA members – and so they do control access to a significant proportion of the total WCPO tuna fishery. For 20 years or more observers have suggested that they have the capacity to establish a cartel type arrangement and so dictate supply to world markets – including influencing prices. The challenge to achieve this among such a diverse group of countries is to be able to satisfy the individual needs and development aspirations of all of these countries – or at least those responsible for the lion’s share of the catch. It has not proven possible to do that and so some countries continue to license fleets under bilateral access agreements while others are pushing ahead with aggressive development of their domestic industries.
While the development of the domestic industries in some Pacific countries does involve Pacific Island nationals, by and large, domestic development is driven by foreign interests. There are some good reasons for that – among them the significant investment required to establish and operate these ventures plus the fact that local experience is still at its early stages of development.

ISLANDS BUSINESS MAGAZINE: Annex B of the Vava'u Declaration on Pacific Fisheries Resources, a result of this year's Forum Meeting in Tonga, indicated a move by Pacific's Forum member countries to try to consolidate the region's tuna fishing industry. What are your views on this move?

WRIGHT: The Leader’s recognition of the significance of fisheries as the region’s premier renewable resource requiring concerted efforts to establish conservation and management arrangements to support sustainable fisheries is overdue and to be commended. As I said above, I do believe that there are already trends towards a restructuring of the regional tuna industry that will see a gradual decrease in the proportion of fishing operations that are supported under bilateral access arrangements and an increase in operations based in the region. My only hope is that the substance of the Vava’u Declaration is not lost on administrators and mangers and that the over-arching principle of supporting development within sustainable limits is in fact applied.

ISLANDS BUSINESS MAGAZINE: One of the highlight of governments proposed actions (Communique of Vavau Forum meet) is to: "Fully implement without delay the conservation and management measures developed and endorsed by the Western and Central Pacific Fisheries Commission (WCPFC)" and "seeking the urgent adoption of additional measures by the WCPFC to address over-fishing of bigeye and yellowfin, including a reduction in longline catches and addressing purse seine fishing, and specific steps to reduce the catch of juvenile bigeye and yellowfin."

What are WCPFC's tuna conservation and management measures and what are its additional measures to address overfishing of big-eye and yellowfin, that the Forum ministers are referring to?

WRIGHT: Conservation and management measures are the formal binding measures adopted by the Commission which all members are under obligation to implement at the national level. If I remember correctly, the Commission has adopted around 15 different conservation and management measures in the two years it has been operational. Some of these relate to regulatory issues – such as the establishment of the WCPFC Record of Fishing Vessels, a schedule for the development and implementation of the regional observer programme and the VMS, for example, and conservation and management measures relating to both target and non-target stocks – non-target being those fish species and other marine resources taken incidentally during tuna fishing operations. Among these are two conservation and management measures that attempt to address the concerns relating to the over-fishing of yellowfin and bigeye tuna. One adopted in 2005 focuses on limiting fishing effort in the purse seine fishery between 20ºN and 20ºS and establishing a catch limit for fleets operating in the long line fishery.
The 2006 measure seeks to establish capacity limits on fisheries taking yellowfin and bigeye using other fishing gears throughout the Convention Area. At last year’s annual Session in Samoa, the Commission agreed that at the 2007 Session, scheduled for Guam in the first week of December, the Commission would develop and adopt a supplementary measure that address the issue of relatively large catches of juvenile bigeye and yellowfin tuna taken by purse seiners that fish on FADs – floating objects or fish aggregating devices.
While this will be a step in the right direction challenges remain in reducing juvenile bigeye and yellowfin catches in that the longline fishery takes significant amounts of bigeye that have not yet matured and also that surface fisheries in Indonesia and Philippines are responsible for significant amounts of juvenile yellowfin and bigeye catch. A measure that is confined to FAD fishing alone will not achieve the reductions in juvenile bigeye and yellowfin catch that are necessary to reduce the threat of the stock becoming overfished.


ISLANDS BUSINESS MAGAZINE: General discussion: any points we missed but which you feel are important to highlight?

WRIGHT: I think you have it pretty well covered Dionisia! Some of these views are likely to be a little contentious for some members of the Commission Dionisia – so perhaps you better preclude everything by saying that you sort me out for my personal views and that these might not represent the views of all the Commission members. Thanks.




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NOTE: This is the original transcript of an interview with Andrew Wright, published in the Islands Business Magazine (www.islandsbusiness.com) as: Interview: Andrew Wright, Executive Director, Western and Central Pacific Fisheries Commission; pp 48,49, December 2007 edition.

Islands Business is the flagship publication of Islands Business International.
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Nakelo men revive old meke

* Islands Business Exclusive

"The meke, performed only by men and held in high regard by the villagers, is called: 'Maravu Levu', which literally translates to mean: 'The Great Calm', but in the context of this dance is the name of a so-called 'waqa ni meke' or 'the ship that carries dances'"

by Dionisia Tabureguci
Thu, 5 Oct 2006

SUVA, FIJI ---- Spectators at the official opening night of the 3rd Melanesian Arts and Cultural Festival were treated to a rare performance of an over 70 year old meke (dance) by an 80-member group from Nakelo village in the province of Tailevu, central Viti Levu.

The meke, performed only by men and held in high regard by the villagers, is called: “Maravu Levu”, which literally translates to mean: “The Great Calm”, but in the context of this dance is the name of a so-called “waqa ni meke” or “the ship that carries dances”.



The dance is of historic significance which the village elders recall as being the meke composed and performed initially for the Duke of Gloucester, the late Prince Henry William , when he visited Fiji in the 1930s.

...Nakelo men performing 'Maravu Levu'.

Village elder Necani Mate is a grandson of one of the composers and explained that this meke is significant because it was composed with the help of the “other side” or the spirit world, at a time when all of Fiji had supposedly subscribed to Christianity.

“The Duke of Gloucester was the first member of the Royal Family (of Great Britain) to set foot on our shores and while all the preparations were being made, the one thing missing was a meke. The governor sought the assistance of the then Vunivalu and Tui Kaba, Ratu Popi Seniloli, to help find a meke for the entertainment of the Duke of Gloucester.” The title of Vunivalu and Tui Kaba are conferred to the high chiefs of Bau island, traditionally the seat of power over the province of Tailevu. The bearers of the titles commanded great respect from areas in Fiji that had political alliances with the islet in pre-Christianity Fiji. This link is still acknowledged today.

“Ratu Popi decided to ask the Tui Nakelo (high chief of Nakelo) for a meke and this was how it became a task during my grandfather’s time for a meke to be composed to entertain the visiting royalty,” said Mate.

He said the composers had run out of ideas so they decided to ask the spirit world for guidance. To achieve this, they performed a sacred ritual to the “other side” which resulted in the “sighting” of the “Maravu Levu”, a seven-decked ship in the Ocean of the Spirit World that supposedly carries “all the dances in the world”. “The captain of the ship told our elders that the ship had run out of dances and the only one left was the dance that tells the story about the ship itself. And this was how this meke made its way into this world,” Mate related.

The unique thing about this dance, he added, was that it could not be performed by people from other parts of the country as the choreography of movements is very complex and is only known by its Nakelo guardians.

“Other areas work on body movements. This meke works on feet movements.

One wrong move and the dancers could be clubbing each other instead,” Mate winked.











...village elder Necani Mate.



The actual performance, said the village elder, is supposed to reflect every aspect of the ship as it sails through the waters of the Spirit World and this was the reason why there are seven traditional dance accessories being used by the seven subgroups of dancers where each subgroup represents a part of the vessel.

Mate said a “full-strength” dance would have to feature 1200-men as this would enable a “reconstruction” of Maravu Levu in its entirety. But this, he stressed, has never been witnessed by anyone as it has never been performed before.
“The one that was danced for the Duke of Gloucester was made up of 800-men and even that has not been repeated because there are not enough people. I must say that the complete set of seven major movements have never been performed before.”
Mate said if the Maravu Levu was performed in its entirety, it would take over an hour.

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NOTE: This article was published on Islands Business on-line (www.islandsbusiness.com) as: "Nakelo Men revive old meke.”
Date of on-line edition: Thursday October 5, 2006.
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ANZ’s new Pacific chief confident in regional economies

“We have made much progress but progress to us here at ANZ is not just how many accounts we have opened nor how much people have saved with us. It is more a question about how we are contributing, how we are helping to unlock the potential in rural areas of the Pacific and whether we are making a real difference to the lives of the people we provide bank accounts and other services to.” 

- Mike Guerin, new managing director of ANZ's Pacific operation.


by Dionisia Tabureguci

PACIFIC island countries are going to see more of the Australia and New Zealand Banking Group as it continues to make its presence felt in the region.

The new managing director of its Pacific operations Mike Guerin said the bank has a number of plans geared towards extending its reach in the region further than the 10 countries that it operates in. 

“I believe ANZ can contribute to the local economies by providing international expertise and knowledge transfer, building local employment opportunities and international career options for Pacific islanders and by ensuring ANZ maintains and grows points of representation throughout the Pacific,” said Guerin in an interview with Islands Business Magazine.

ANZ, the fourth largest bank in Australia, has presence in Vanuatu, Tonga, Timor Letse, Solomon Islands, Samoa, Papua New Guinea, New Caledonia, Kiribiati, Fiji, Cook Island, American Samoa, together contributing over A$100 million a year to the Group’s financial results.

In return, ANZ has been a major player in financing businesses in the region as well as making available financial services to the rural communities through its rural banking partnership with the United Nations Development Programme.

Guerin said the bank has an obligation to be an even greater contributor to innovation, employment, investment, increased productivity and community support across the region. “We need to better structure our business to strengthen organic growth and support inorganic growth opportunities. I see a need for greater specialisation and an even stronger focus on our customers and building on our customer value proposition,” he said.

Being a large business in the region also comes with certain responsibilities and in the past, banks have come under fire, accused of directing funds only to sectors that are doing well and lessening their exposure to suspect sectors in order to save their skins.

An example is the Agriculture sector in Fiji in the last five years when the sugar industry began to go down. The decline was reflected in the drop in commercial banks lending to the sugarcane-growing business, which decreased from over F$85 million in 1994 to F$14.9 million in 2001 to F$4.7 million in 2005, according to Reserve Bank of Fiji statistics.

Guerin offered a bank’s perspective on this. “Fiji’s sugar industry is presently going through some changes designed to better position itself for future prosperity,” he said. “Prudent management of their debt levels and repayment obligations is important to industry participants while they seek to place the industry on a stronger footing. One of our obligations is to ensure we not lend money to people and industries where resultant repayment obligations will further stifle their ability to remain viable,” he added. The bank believes its role in stimulating activities in the rural areas is being delivered in a more holistic way.

An example of this, Guerin said, is the ANZ-UNDP rural banking partnership, designed to benefit rural dwellers and not just those involved in agriculture.

The project, piloted in Fiji, is now made available in Samoa, Tonga, American Samoa, Papua New Guinea, Kiribati and the Solomon Islands.

To date, the project has opened over 60,000 accounts and mobilised over AUD$3 million.

“We have made much progress but progress to us here at ANZ is not just how many accounts we have opened nor how much people have saved with us. It is more a question about how we are contributing, how we are helping to unlock the potential in rural areas of the Pacific and whether we are making a real difference to the lives of the people we provide bank accounts and other services to,” said Guerin. “

People now have a safe place to save with a bank that comes to them, they are able to borrow at competitive interest rates to improve their homes, start small businesses or purchase a truck for their village. Parents are able to save for school fees, pensioners in rural areas now don’t have to spend most of their monthly benefit on paying for transport to town and most people have enough savings to get them through an unexpected natural disaster,” Guerin added. 

He said the bank’s Pacific operation would be using the rural banking project to expand its lending to agriculture.

“The future will see ANZ continue to expand into new countries; develop new products and services to ensure we keep up with the needs of our customers and partner with new organizations and increase the availability of banking services in rural areas. Financial literacy and our partnership with UNDP will remain a cornerstone to all future developments.”

Overall, the bank sees opportunities across the board and would be strengthening its focus on specialisation, with tourism being an industry high on its priority list.

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NOTE: This article appeared as: “TOURISM HIGH ON BANK’S PRIORITY LIST”…Guerin has plans to extend ANZ’s reach; pp 42,43, November 2006 edition.

Islands Business is the flagship publication of Islands Business International.

In this blog, picture of Mike Guerin in a press conference in Suva supplied by ANZ Fiji.

Interim government investigates “new information” in mine deal

Rehab Deed for mine sale delayed

By Dionisia Tabureguci

FIJI’s interim government has deliberately delayed the signing of the Deed of Rehabilitation for the sale of Emperor Gold Mine (EGM) in Vatukoula because of what it says are “new information” that it has begun to investigate.

As corporate announcements in Australia allude to the completion of the sale process between Emperor Mines Ltd (EML), the ASX-listed owner of EGM, and Westech Gold Pty Ltd, a private company in Australia headed by former EGM engineering consultant Brian Wesson, Fiji’s interim attorney general Aiyaz Sayed-Khaiyum has confirmed to Fiji Business magazine that “certain matters have come to light and which we are in the process of investigating and verifying”. Saiyed-Khaiyum chose not to elaborate on what these “certain matters” may be but gave indication that a decision may be reached by the end of the week (end of March).

“I can assure you that the decision made will be in the interest of the community in Vatukoula and also in the interest of the nation,” he said.

It is understood the signing was to have taken place on March 20, 2007 with all parties on standby but this did not eventuate because the AG had not given approval.

Ever since EML’s announcement in December last year that it will close down its Vatukoula mines, questions have been raised by industry experts and representatives of the affected Vatukoula community regarding various events that transpired afterwards, including the sale of the mine to Westech, an Australian incorporated company whose owners have been quoted as associating it more to power production than gold mining.

In particular, questions have been raised on the background and backers of Westech Gold Pty, given that it was only registered with the Australian Securities and Investment Commission in February this year.

“This should raise some serious questions about the authenticity of the whole deal,” said a concerned source, familiar with the operations at Vatukoula.

“Given that (Westech Gold) was only registered in the past month, the company cannot have any asset and I simply cannot believe that the Fiji government will allow the sale of the company (EGM) with $15 million in liabilities to a company with no asset. What nonsense is this?”

In a series of correspondence with Fiji Business magazine, the source has joined other industry observers in expressing reservation about the deal, which they view with deep suspicion as being created to allow Emperor Mines Ltd to get out of its financial, social and environmental obligations at Vatukoula.

Further criticisms were levelled at the nature of the transaction, which involved no actual purchase but simply a transfer of shares from Emperor’s companies that own the Fijian assets - along with the liabilities – to Westech Gold.

This disposal has in turn given much relief to EML’s major shareholder, South African owned Durban Rooderpoort Deep Ltd (DRD) who has been moving to improve upon its battered share price performance by cutting down its losses, contributed mainly by the estranged Vatukoula operation. DRD had also made known its plans to sell its interests in Porgera and Tolukuma gold mines in Papua New Guinea and to undertake a major restructure and share consolidation. The complete disappearance of Vatukoula and associated liabilities from its books has given the miner much room to move with its restructure plans and has also returned some investor confidence with its share price having recovered overnight on the Johannesburg Stock Exchange.

But what it has left behind in Fiji is a long list of unanswered questions and concerns about the new owner of the Vatukoula gold mine, the expertise that it seem to lack and the financial position that not many are aware of.

Another commentator to this magazine noted how the new owner expressed optimism in restarting Vatukoula, which he believes is already a dying operation.

“Restarting sunset mines is always difficult,” he said. “For such a mine, the finding of a new and higher grade orebody system is usually what is required to revive it from its natural death and this upside potential was not there when EML decided to sell Vatukoula. I doubt very much that there is an upside to EGM because of lack of viable resources to kick start mining operations and the 4million ounce resource infers total resource…what is more critical is how much of this total resource is categorised as being amenable to mining.”

Representatives of the gold mining community have also expressed their concerns. In an open letter to Fiji’s interim government last month, the representatives urged the interim administration to intervene in the ownership transfer of the Vatukoula gold mine.

The list of issues that EML has left behind and which workers reps are not sure how the new owner proposes to deal with, relate to: the recently redundant December 5th 2006 workers, the stranded 500 or so subcontractor employees, unresolved disputes like the 1991 strikers and workmen compensation issues, landowners and historical land claimants, environmental concerns both within and downstream communities, women, children and other groups affected by the Vatukoula mine closure.

“Government should assure the people of Vatukoula that all these obligations will be taken care of, by whom and when before it concludes negotiations with the two companies Emperor and Westech,” they said.

Footnote:

Who is Brian Wesson?

Brian Wesson is the owner of Westech International, the company that has been associated with the transfer of ownership of EML’s Fiji operation to Westech Gold Pty Ltd, a company that only got incorporated in February 2007. 

Prior to moving into this major undertaking, Wesson was chief engineer at Vatukoula in 1993 where he spent 11 years. An electrical engineer with over 30 years experience in the resource and energy sectors, Wesson started his career with Rand Mines in South Africa in 1980 in the electrical department of the Harmony Gold Mine. He was transferred to East Rand Propriety Mines as sectional resident engineer in 1982 and was moved to Durban Rooderpoort Deep in 1989.

On September 19, 2006, Wesson was appointed a non-executive director of ElDore Mining Corporation Ltd, an Australian mineral exploration company that recently acquired Robust Mines Ltd in Fiji. Robust Mines Ltd has exploration properties in Waimanu in Colo-i-Suva, Buca (Dakuniba) and Vatukoula South West.

Wesson’s resignation from ElDore was announced on ASX on January 29, 2007. Wesson emerged again in mid-March when EML announced it was selling EGM to Westech International. The press reported Wesson and his wife Amelia as directors of Westech International.

***

NOTE: This article was published in the Fiji Business Magazine as: "New information prompts govt to delay gold signing. AG Sayed-Khaiyum: 'We're in the process of investigating and verifying'", pp 5,6, April 2007 edition.

Fiji Business is a publication in the Islands Business International portfolio and sold only in the Fiji islands as an accompaniment to Islands Business Magazine.

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Will Datec Crumble?

SAP enters Fiji's software market through Pacific Connex but Datec Fiji is not batting an eyelid

by Dionisia Tabureguci

DEPENDING on who you’re talking to in Fiji’s software industry, there are varied views on the advent of SAP business solutions to our shores but if there is a common ground, it has to be the growing perception that this Johnny-come-lately is a harbringer of changes never seen before in the market.

There are those who prophesy the demise of a certain major reseller, those who believe in the possible transformation of the smaller software companies, the shift to oblivion of those not receptive to the anticipated changes forecasted for the industry and most will nod emphatically as if it is a kind of vindication that, yes indeed, SAP will be something of a reckoning for a lot of people.

In a country where your average day to day person does not know so much about computers, let alone talk software, it is not surprising that the word SAP has become coined with the Native Land Trust Board, PacificConnex Ltd and the Fiji-born now New Zealand citizen Ballu Khan.

When you begin talking to a fellow who says something like: “Yes, SAP is THE software. It’s Tier One. It’s Fortune 500. It is one of the best you can get if you’re a big company…”, you are talking to someone either in the business of selling software or is providing support services to those who buy them.

For a fact, the name SAP is closely linked to huge multinational corporations on Wall Street, the kind that have offices all over the world and that do billions of dollars worth of turnover each year, making it imperative for them to use a software designed to handle the resulting complexity of the massive business.

In that fast paced environment, SAP is known as one of the Big Three, that term referring to the three ERP (Enterprise Resource Planning) software vendors whose products compete for the attention of these very big companies (the other two are Oracle and PeopleSoft).

Early this year, it became known that the brand was coming to Fiji via PacificConnex Ltd, a new joint venture between Khan and NLTB’s investment arm Vanua Development Corporation.

One could almost hear the silence of the industry as it braced itself for what it expected were changes but which it did not quite know what they were or what shape they would configure the market to.

Then the NLTB proudly announced it was awarding PacificConnex the job of putting in place the IT infrastructure for its business, core of which are granting leases and collecting rent monies for distribution to the indigenous landowners.

That was when the panic attack began for the one other company that those in the know were expecting would recoil and go running back to the boardroom for a Plan B.

Officially, Datec Fiji Ltd did not make a sound. But its major shareholder Jim Ah Koy did.

As former finance minister responsible for bringing in SAP for implementation by the Rabuka government in 1998 – this was following a report on the Government’s IT needs compiled by PricewaterhouseCoopers, the accounting firm that also ran a consulting arm for SAP in Australia - Ah Koy knew a fair bit about the software and warned NLTB that it would ‘bleed to death’ from choosing to run its business using SAP.

From experience, Ah Koy knew it was complex and expensive if one was looking at returns on investments . When it was scrapped in 1999, that SAP solution had already cost that government close to $10 million . 

And until today, the software has not been implemented.

Now apparently wiser, Ah Koy decided to take on an advisory role admonishing NLTB that it will lose more than it expected to gain.

Did Ah Koy’s seemingly anxious reaction point to a certain wariness in the Datec camp?

“Not one bit,” said its manager professional services Rahul Ganatra. He sat comfortably in the boardroom alongside the cool and composed managing director Krishna Sami.

Datec is apparently unfazed by all this SAP talk. If Khan had thought competing against something like SAP would be a ‘daunting task’, the only other company big enough to fit the bill as a competitor would be Datec Fiji and there it was wishing PacificConnex and Khan the very best.

“Bringing SAP here is like buying a plane and using it to travel from home to the office. Would you buy a plane or would you settle for a car? That is what this situation is about – SAP is too expensive and too complex it’s like buying a plane when what suits your need is just a car,” said Ganatra.

That was an echo of a remark made by the head of a smaller software solutions company who likened the situation to someone buying a limousine for driving along the backroads of Fiji.

“It is no doubt the world’s best enterprise-wide financial software but the question is: do we really need something that big and sophisticated for the size of businesses we have in Fiji,” he had alluded to NLTB’s decision to choose SAP.

According to Khan, the NLTB would be using mySAP Business Suite which is designed for small and medium enterprises (SMEs).

That seemed to mystify the local software expert who further questioned the logic in bringing in a product that would cost $1.2 million each year for 12 years to support.

“If what they’re giving NLTB is an SME package and it has to pay in millions every year, what company in Fiji would spend like that on software? For the size and complexity of NLTB, you can easily get a solution already in the market which can handle it for much cheaper , “he said.

At the Datec boardroom, Ganatra was ready with a list of multinational companies that had implemented an SAP solution and threw it out because it was too costly to run.

While many in the industry were speculating on a possible Datec run for the money move, Datec made clear it was doing nothing of the sort and would rather wait to see “SAP cut to size in the Fiji market”.

For those thinking there may be a possible partnership between PacificConnex and Datec, both parties have indicated an openness to talk but no one has made a move.

Such a partnership, said Khan, would have to be in Datec supplying the hardware for all PacificConnex jobs. After all, there is a business partnership between the computer hardware company IBM and SAP in the global market. In Fiji, Datec is the sole supplier of IBM computers. Khan is open for talks on this aspect but Datec is sceptical about it and thinks it is a way for Khan to get Datec to start rooting for SAP.

“We think SAP is not suitable for Fiji and we would never recommend it to any business here, not even to the Government” said Sami.

“When you talk SAP in those big economies, you’re talking billions of dollars turnover so it is logical for them. Our GDP (Gross Domestic Product)as a country is so small compared to that and we don’t need to spend so much money on such a complex software,” added Ganatra.

Datec obviously has anchored its confidence in its established market position, a good client base and its understanding of the Fiji market. Already, it is viewing its own strength as PacificConnex’s weaknesses.

“A few years from now, somebody is going to get burned from this and that is when they will understand that you don’t need to spend so much on such a software when you can get something for far less the cost and which does the same thing,” Ganatra said.

“It’s not going to be that simple so watch that space,” he smiled.

The train of thoughts in the other camp heads in a different direction. Khan is busy holding marketing conferences in Suva and Nadi, talking to around 15 companies and putting together proposals . Not to mention getting in Auckland Blues star player Carlos Spencer to incarnate the potential in PacificConnex and how a business could tap it.

The fundamental strength behind Khan’s aggressive marketing is his own experience and that of the PacificConnex team with SAP-based solutions. True the complexity thing has been tossed around but to Khan, it is really a state of mind.

“SAP is a business software. It is reasonably as simple or as complex as you want it to be but those are not software issues. They are management issues,” he reasoned.

Fiji, it seems, is ready for SAP. In fact, it has been long overdue , according to Khan. He believes the Fiji market is starving for quality world-class business solutions that reflect the technological advances already made in this industry.

But the might of SAP is only fully comprehended by those who have worked it into the landscape of a business and in doing so, have transformed that entity.

Described as fully-integrated, highly effective software that covers all vertical aspects of more than 22 different industries, SAP is being pushed here by Khan not just as a software for handling a business but a tool that may be used to ‘transform’ the business and take it to another level.

That, he believes, is where the market will ultimately be forced to make up its mind. Those wishing to transform are going to find PCX’s SAP product worth the investment while those wanting only to streamline and keep it simple will have to settle for something else.

Clearly, it is now up to the market to decide whether or not SAP is welcome or whether it will be written off again as a complex, daunting and expensive exercise that was never suitable here in the first place.

Both sides agree that only time will tell.

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NOTE: This article was published in the Fiji Business Magazine as: Could SAP change the way we do business? Local software industry adopts a wait-and-see approach; pp 8,9, July 2004 edition.

Fiji Business is a publication in the Islands Business International portfolio and sold only in the Fiji islands as an accompaniment to Islands Business Magazine.

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Rick Hou sure of Solomon Islands economy

by Dionisia Tabureguci
photo of Rick Hou supplied by Central Bank of Solomon Islands


WHEN the century turned in 2000, so did the social and political matrix of a few countries in the Pacific islands. While nations like Samoa and Cook Islands were earnestly mending the nets of their economies to better their prospects, others like Fiji, Papua New Guinea and Solomon Islands were going the other way. In particular, the meltdown of Solomon Islands towards the end of the 1990s is well documented as being linked to land-related tension between native Guadalcanal islanders and neighbouring Malaitans.
The reign of the Isatabu Freedom Movement, a group that comprised Guadalcanal islanders, saw the attacks and subsequent displacement of Malaitan settlers on Guadalcanal, finally erupting into a takeover of Honiara and Bartholomew Ulufa’alu’s government in 2000 by armed militants that belonged to the Malaita Eagle Force.
Continued standoffs resulted in the occupation of Solomon Islands by the Australian-led Regional Assistance Mission to the Solomon Islands (RAMSI) in 2003. Law and order were gradually restored and economic rebuilding began.
In those trying times, one institution that held fast to its mandate was the Central Bank of the Solomon Islands. With governor Rick Hou at the helm, the country’s economy began a slow but steady climb back to normalcy. In April this year, Solomon Islands held its first national elections since the ethnic tension.
However, the newly elected government and its prime minister drew a violent public outcry after being accused of corrupt collaboration with Asian businesspeople.
Rioters burned and looted Chinatown, a commercial section in the capital Honiara run by Asian businesspeople. While this did put a dent to progress made in rebuilding the economy, Hou remained optimistic that the country will not suffer. In an interview with ISLANDS BUSINESS Magazine, he spoke of an economy that is faced with other major challenges.


INTERVIEW

IB: You were optimistic about the Solomon Island economy before the April riot. Do you still feel that way?

Hou: Oh yes. I am still optimistic. Last year, the economy turned a 5 percent growth and our forecast this year is 6 percent. Given the persistence of the trend that we saw happening most of last year, indications are that the trend will continue so we will keep our growth forecast for this year and last year. We will not review them.


IB: So the April riot is not going to be affecting the economy so much. How is that?

Hou: Our assessment is that there is not a lot of impact in the short term. We looked at the government revenue side and felt there would not be a lot of impact there. I guess the areas where we will have negative impact are in security, property rights and investment confidence. The riot came at a very bad time when we were trying very hard to rebuild confidence and it is not a good thing to happen at a time when we are doing this. So I think we will have to work very hard again to convince not only our own people here but also most overseas investors to invest.


IB: What then has been the driver of Solomon Island’s economic growth?

Hou: Last year, the main drivers of the economy were construction, utilities and distribution or wholesale activities. That one has dramatically gone up.


IB: Is this because of RAMSI?

Hou: I think so. But generally, the economy is picking up, especially the construction sector. There’s a lot of construction going on…roads, bridges, buildings. But along with that, consumption has also gone up really dramatically.


IB: RAMSI, we have been told, will extend its stay in the Solomon Islands. How do you see that in relation to the country trying to put forth a good image for investment?

Hou: You ask the ordinary man on the street about the presence of RAMSI and they will tell you that, yes, we need RAMSI. I guess the feeling of normal Solomon Islanders here is that our institutions are still fragile and there is still a need to get on top of the issue of law and order. Our government departments need to be sorted out. So there is a lot of need for institutional building, training, skills upgrade…these are all happening at this time and I think it is not going to be a short-term thing.
I also believe that these are areas where RAMSI’s input should be - in building our confidence in our institutions and that our own people can manage them, for example, the government department, finance. I guess it is in the rebuilding process where we will need RAMSI to help us in. So I think the extension of RAMSI will be positive there. But I think what RAMSI should be careful of is giving an impression that it can fix everything because it cannot.


IB: You were saying that there is a need for rebuilding and strengthening institutions. What is the situation right now?

Hou: Yes, there is that great need. Look at our police force for instance. It was badly affected during the ethnic tension. We had officers who were taking sides and as a result, the integrity of the police force was badly affected by the ethnic tension. We are now in the process of re-recruiting and retraining and in the process, we hope that the confidence that the public has in the police force will return. At the moment, it is still doubtful. So our police force is one institution that needs to be upgraded in terms of the confidence that people have in it, that it can really enforce the law. Other institutions like government departments; well, some of them are doing very well because of RAMSI’s presence in them, for example the Ministry of Finance and Treasury. They have people in there who are looking after things, for example, in treasury, things are now under control as far as government finance goes. Now they are going to have local counterparts to understudy the overseas RAMSI officials that are occupying positions there. Good things are also already happening in the judiciary. Much improvement is needed in other areas like the utilities. Our electricity and water supplies are very weak at the moment. Also in the areas of good governance, we are very weak here in the Solomon Islands so we need to revamp the governance aspect of our all institutions, whether in government, semi-government or those in the private sector.


IB: And then there is the issue of corruption…

Hou: Yes, there is a fair bit of that still happening and this is because of the absence of governance principles, rules and regulations. Some people tend to interpret rules and regulations according to how it is convenient for them and in some institutions, the checks and balances are still not there. One of the things that people have been urging RAMSI and government to do is to bring to account any corruption cases. There are a lot of speculations and allegations going on but nothing has really come to the front to prove that corruption has taken place. People have been terminated and sacked as a result of allegations for corruption and in the last government, ministers were sacked left right and centre but I don’t think there has been any case where the court has sent people to jail for their involvement in corruption.


IB: You were talking about the problems of over-logging. How much of a threat is that to your economy in your effort to gain from your natural resources?

Hou: I have three concerns when it comes to logging. The first concern is that of the environmental damage that logging is causing to our country. I am not sure about the management practices that logging operators apply in the forests. I can only see it in my own local area where – I mean I know very little about forest management - but all I know is that rivers are not flowing and what you have in the lagoon is mud and that’s all I see. So definitely, some environmental concern is there. The other concern I have is: what will happen when we run out of trees? According to the forestry experts at the Forestry department, we will run out of trees in six years’ time if we keep cutting at the rate we are cutting. Six years is not a long time and that is where my third concern is, when we will be looking for something to fill this gap.
Sadly for us, logging has now become the mainstay in terms of foreign exchange and in terms of our exports as it accounts for almost 60 percent of our exports. In terms of our exports, logs is one of our few exports and it account for more than 50 percent of our exports. It is also an important government revenue – it accounts for more than 30 percent of government revenue so it is a very important commodity at the moment. My concern is: what will happen in six years’ time?
The third concern that I have is really a question that I have been raising for a number of years that I just have this gut feeling that the local economy is not getting maximum benefits out of logs. Yes I mentioned that it is the leading export earner for us but it could be more. I am not sure about the prices that we are getting out of our logs because we do have very valuable trees here. I am not sure about the value we are getting for our exports and the value we are getting in terms of our import duties because for a number of years, these logging activities have enjoyed a lot of exemptions. I am also overly concerned about the resource owners. I am not sure whether they are getting any benefits out of this. I have my doubts.


IB: So this is mostly the private companies who are here to do logging?

Hou: At first it used to be foreign companies who come in here to do logging. The license allowed you to do logging and give you a quota, which allows you to log a certain cubic meter of logs. In the last few years, the government had moderated that project. What it did was gave resource owners the license and, in theory, these resource owners and landowners would own and run the logging operation. However, things did not happen that way. The thing that is happening now is the landowner or the license holder, usually goes out in search for a foreign company to operate the logging operations. And there’s very little government involvement in the negotiation process. And this is where I see the landowners losing. For example where I come from, some of the landowners are getting SB$40 (US$5.20 per cubic meter) and I am not sure if the landowners know exactly that they are getting the wrong end of the stick.


IB: Isn’t there a mechanism or process in place that will take care of the marketing of this commodity?

Hou: There have been suggestions and discussions and proposals on this but unfortunately the way the whole process has been managed is so murky and disorganised that everyone is doing their own thing. And as long as you can get a license, a concession and landowner agreement, you go ahead and log. At the end of the day, I think the landowners are the ones who are losing out the most.


IB: Solomon Island’s foreign reserves situation looks attractive with an average seven months import cover, mostly from aid monies as you’ve mentioned. Would you expect this situation to continue in the immediate future?

Hou: Solomon Island’s external reserves position has been relatively high since 2004. In fact, over the last 18 months, the foreign reserves represent an average of six months of import cover. This is quite an achievement given that the Solomon Island’s external reserves have, historically speaking, been always below three months of import cover. So for the moment, our external position could not be better. We are very mindful however, that much of this was derived from donor assistance and other RAMSI related activities in the Solomon islands. However, since last year, we have seen some improvement in long-term sustainable sources of foreign exchange, for example in exports and foreign direct investment. I believe the favourable situation would continue for some time yet. Much of the economic reforms and physical infrastructure rehabilitation work has barely started and hence with government commitment and donor assistance, it should still continue for the foreseeable future. These reforms and the rehabilitation process will take time and commitment, but when pursued consistently, economic activity is expected to pick up further.


IB: Inflation is at around 10 percent. Could the economy sustain such high rates and what is being done to mitigate inflationary pressures?

Hou: Historically, double-digit inflation is not new to the Solomon Islands. However in the last two years, it has been maintained in single digits. More recent numbers released by the Statistics department show inflation has declined to 8.5 percent by the end of 2005. This is within the central bank’s policy objective, which is to keep inflation below 10 percent per annum. Prolonged inflation of over 10 percent would pose a threat to economic growth. Current monetary conditions however pose potential risks to this policy objective. The banking system is highly liquid and the government has built substantial deposits with the banking system. Higher oil prices, accelerated lending by commercial banks, a draw down of government balances and the RAMSI spending could all add to inflationary pressures. In a small open economy like the Solomon Islands, price stability is vulnerable to all these movements. The previous government had acted sensibly and responsibly to help ease this pressure and the new government should do the same. The central bank is poised to take appropriate action to lessen any inflationary pressure by mopping up excess liquidity to influence domestic credit growth. We may also use administrative measures where necessary and of course, use moral suasion. We do however encourage financial institutions to provide greater access to financial services in the rural areas.


IB: What about exports, how is that faring?

Hou: Solomon Island’s export base is very narrow and is mainly in raw materials. Production levels of our main commodities – round logs, fish, copra and cocoa – have rebounded since the restoration of law and order. Log production has been running at record high, although unsustainable, levels. Production levels in other commodities are already close to pre-crisis levels. There is still capacity to increase production and to broaden the economic base. The Oil Palm project, which has been taken over by a PNG-based investor, is expected to start production this year. Given the high level of interest in this commodity, it may in future become a major source of employment, foreign exchange and general economic activity for the Solomons. In the mineral sector, although its production schedule has been pushed back by about a year, plans to restart the Gold Ridge mine is already a source of confidence building.


IB: What is your view on the progress of the global economy and how Solomon Island’s economy can benefit from it?

Hou: The positive growth indications in the global economy are encouraging as it will be helpful to us. More particularly in Japan and some of the Asian countries, which are important destinations for our exports, we are hopeful that these positive trends will continue. However, the consistent rise in oil prices will seriously undermine these hopes. For Solomon Islands, oil accounts for about 40 percent of our total imports and is an important component in local production. The increasing oil price therefore poses potential risks to this positive outlook. And for a small open economy like Solomon Islands, we are extremely vulnerable.

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NOTE: This is the original transcript of a Rick Hou interview, published in the Islands Business Magazine as: Interview: Rick Hou, GOVERNOR OF THE CENTRAL BANK OF SOLOMON ISLANDS, pp 34,35, September 2006 edition.

Islands Business is the flagship publication of Islands Business International.
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Training top on APP agenda

Association of Pacific Ports consolidate through new secretariat

by Dionisia Tabureguci


TRAINING of management level personnel is top on the agenda for the South Pacific Community’s Regional Maritime Programme (SPCRMP), the new secretariat of the Association of Pacific Ports (APP).
It takes over from the Ports Authority of Fiji (now Fiji Ports Corporation Ltd) and was formally handed the function in the signing on a Memorandum of Understanding between SPCRMP and APP during the latter’s 31st annual conference held in Fiji last month.
SPCRMP’s maritime ports security officer Timoci Tamani said the move should go a long way in helping the organization to realise its goals by virtue of SCRMP’s expertise and the network that it has already established in the regional maritime industry.
“In the past years, the APP secretariat had been taken up by Fiji on a volunteer basis so all the expenses and everything related to the secretariat was borne by Fiji all along. And because there was no full time person responsible for that role, most of the activities that APP did or would have liked to put in place were not done. In essence, everything just went to sleep as those tasked with doing the secretariat’s job had their own responsibilities with FPCL,” said Tamani.
It was only logical, he added, that the role be transferred to SPCRMP, a programme that comes under SPC’s Marine Resources Division.

More important are the two key components of this programme which include the provision of legal advice on maritime policy and legislation as well as the provision of training to maritime administrations, training institutions and seafarers throughout the region to bring their operations into line with international codes and conventions.
Now with the two organizations in direct alignment with each other, what has been envisaged is “the strengthening of APP as a formidable lobby group in the Pacific with SPCRMP harnessing the power base of its members to take up regional issues collectively with the objective of bringing about awareness and proactive change to the Port industry.”
That is a key, although long-term goal. A more immediate issue that APP is faced with, according Tamani, is the lack of formal training for port workers and this is what the new secretariat will set out to do first.
“We have a F$500,000 grant from China for port development for the next five years and we will be using it for training. We are already lining up target recipients for that,” said Tamani “We think we will spend all that amount within two or three years because of the need that is there.”
Also under discussion is a proposed Degree level course at the University of the South Pacific to treat the subject of maritime transport management, in a bid to inject a more serious tone into the port business.

“The course will be for the shipping industry – for the ports, shipping and movement of cargo. There is not a place in Fiji where one can go to and do those courses so we are talking with USP it already has campuses around the region. Last year, we held discussions with people in the port industry and as a result, we saw that there was a need for such a course. Many people working in the port industry are experienced workers but very few have proper qualifications because the courses are only available overseas,” said Tamani. “We are proposing with USP for this course to come under its School of Marine Studies and we hope that it will start by next year.”
With an expanding and what is now becoming a more sophisticated port business in the region, the APP conference ended with the views that the need for training is crucial.
Also on its agenda - and which the secretariat will be expected to play an important role in – is to get governments in the Pacific to recognize the importance of their port business to their economy.
“We are all island countries and we depend on a large degree on seaports for our external and internal trade. But the emphasis seems to be on tourism and air traffic,” commented Herbert Hazelman, executive president of APP. “We feel that Pacific island ministers and governments should give seaports and the maritime industry more recognition. Give it the recognition that it deserves because we are island nations and all we do is rely on the sea for the transfer of 95 percent of our trade and the majority of our population between the islands.”

After its symposium, APP presented its list of issues to the meeting of ports chief executive officers also held in Suva on the same week.
“We did a one hour presentation and it was well received. Hopefully, there would be some changes in attitude by governments in the Pacific in that they give due recognition to ports as a major player within the economies of island countries.”
Hazelman said most of the issues common to all ports in the region are pollution, the presence of derelicts and the lack of a formal training programme for land-based port management.
“With SPC’s involvement, we will hopefully be able to push our agenda up there to be recognized alongside air transport, tourism and the rest of it,” he added.
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NOTE: This article was written after coverage of the 31st Annual conference for the Association of Pacific Ports (APP), held at the Fiji Ports Corporation Limited's HQ, Kaunikuila House, at Flagstaff Suva, Fiji from June 04 to June 7, 2006.
The article was published in the Islands Business Magazine as: TRAINING TOP ON APP AGENDA, Bringing port operations into line, p37, December 2006 edition.

Islands Business is the flagship publication of Islands Business International.
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Vodafone Fiji upgrades to 3G

But where is the ISP license?

by Dionisia Tabureguci

IS FIJI's Internet Service Provider market really deregulated or is it still showing signs of a hallucinating monopoly haunting the living daylights out of existing and potential newcomers?
One must not ask Lionel Yee a question even closely resembling that because he will only politely direct your attention – and in a very rhetorical way - to the decision made by that previous government which chose the model of deregulation for Fiji’s telecommunication industry.
As chief executive officer of Amalgamated Telecom Holdings (ATH), holding company of Telecom Fiji Limited (TFL) which is the majority shareholder in Vodafone Fiji, Yee is often heard to express to the media how peeved the conglomerate is at the way the telecommunication industry had been handled and how short people’s memory seemed to be when it came to acknowledging that.
If ATH has become a beast that people love to hate, then the beast was created not by its management, but by past decisions that loiter around like a bad smell that wouldn’t go away.
“We didn’t get into this space for free,” says the veteran corporate manager who is also chairman of the Vodafone Fiji board. Yee’s foray into telecommunication began immediately after the Fiji National Provident Fund bought 49 percent of ATH from the Fiji government in 1998. He had taken over the role of ATH CEO after serving at the top management level of the pension fund for a number of years.
“We paid close to F$250 million for this and don’t forget, part of the agreement when we bought it was that we have five years of status quo. But we never had one minute of peaceful existence. Every five seconds, we have people trying to barge into us.”
Yee made another classic side step during a press conference in Suva last month when asked about Vodafone Fiji’s ISP license status, since the company has now begun to offer Internet based services to the general public.
He mumbled something about the country’s sole mobile telephone service provider going into wireless Internet and the rest was inaudible.
While announcing its US$15 million partnership with Ericsson Australia for the upgrade of its mobile network to a 3G standard – which its release says will cost it a total US$50 million over a five year period - this affiliate to the country’s biggest listed company had nothing to say about its procurement of a license to provide what would now become new revenue sources among its range of services.
“High speed web surfing and data access while mobile will become a reality so the experience will be the same whether you are in the office or outside. Speeds of at least 1MB/s and up to 14 MB/s should become the norm,” Yee announced. “The new technology will allow Vodafone Fiji to launch a whole host of new infotainment services such as Vodalive!, multimedia messaging, video telephony, location-based services and high speed wireless Internet.”
Behind the grand design however, no one is in a hurry to talk about levelling the playing field where licensing is concerned. There are people in the industry who are confused about this. Does Vodafone Fiji need an ISP license to operate or does it not?


...ATH CEO and Vodafone Fiji chairman Lionel Yee announces the Vodafone Fiji/Ericsson partnership in Suva, Fiji, November 2005.






If it needs a license and does not have it, why has it been allowed to provide Internet services? Another subsidiary question pops up: where is the industry regulator in all this?
What has been labelled as “one hell of a messy confusion” does not end there. Both TFL and its subsidiary, Internet Services Fiji Ltd (trading as Connect) do not have ISP licenses, a point that was raised by the Commerce Commission in its recent ruling on the price of telecommunication services in Fiji. If, under Fiji laws, companies are required to be licensed in order to provide Internet services, as has been required of the new independent ISPs, why are Connect and Vodafone Fiji exempted from this rule?
The Department of Communication, which is the industry regulator and licensing authority, had referred all queries to its ministry’s chief executive officer.
The Ministry of Information, Communications and Media Relations is silent on this issue and did not reply to questions sent to it.
In all fairness, it may be pointed out that telecommunication is a complex industry where problems are not solved overnight. But ISP licensing has been a sticking point since the Internet was introduced into Fiji in 1995. Local media reports at the time had pointed out that there was no mention of the issuance of an exclusive ISP license to Telecom Fiji. Ten years on, this point remains unclarified despite the huge change in Internet and Internet technologies since then.
Yee later reiterates what TFL has consistently argued over the years. That the exclusivity clause in TFL’s telecommunications license is all-embracing and covers all forms of communication in the domestic market, whether transmitted via telephone, telex, telegraph or in data form.
This same rule applies when TFL transferred the part of its license that deals with mobile communication to Vodafone Fiji when the latter was incorporated in 1993.
The conglomerate’s deep conviction with this argument has, over the years, seen it reluctant to allow new players into the market despite government moves to gradually deregulate certain parts of the industry. To illustrate the incumbent’s reluctance, one ICT specialist pointed to the fact that despite the number of ISP licenses that has been issued by the government since it opened the ISP market in 2000 – and this amounts to more than 10 licenses – not one new player has entered the market until this year. If those who had applied for those licenses had banked on some brilliant ideas that they could bring cheap connections to their customers by buying bandwidth directly from offshore resellers or directly from FINTEL (Fiji International Telecommunications Limited), they were greatly disappointed. TFL waived its exclusive licence and emphasised its right of control in the domestic telecom kingdom. No one was going anywhere if they did not go through its network. That being one part of its argument, it then moved to dub itself an ISP and created Connect in 2002 to trade its Internet business. As the Commerce Commission highlighted, both still do not hold an ISP license. But as Yee and TFL managing director Josaia Mar have often argued, every move that TFL makes is catered for in the company’s telecommunication license.
This argument has never been legally challenged however and there are those in the industry who still wonder about how this license, issued in1989, could have foreseen the advent of the Internet when this medium of communication was still a budding cocoon at the time and the world had yet to come on line.
But if the unclarified issue was swept under the carpet, as some commentators believe, then it has been flushed out again as the ATH Group of companies, particularly Telecom Fiji and its subsidiaries Vodafone Fiji and Connect, are forced to compete in a business that is rapidly reinventing itself.
As this edition went to press, it is understood that Connect has finally applied for an ISP license but Vodafone has yet to make an application.
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NOTE: This article was published in the Fiji Business Magazine (www.islandsbusiness.com) as: Vodafone Fiji US$50 million 3G upgrade...But where is the ISP license? pp 7,8, December 2005 edition.

Fiji Business is a publication in the Islands Business International portfolio and sold only in the Fiji islands as an accompaniment to Islands Business Magazine.
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Yaqara Studio City developers seek F$4.5 million

Stage one of studio city to cost F$200 million. YGL seeks F$4.5 million for documentation, marketing of stage one.

by Dionisia Tabureguci

THE Yaqara Studio City project has been called many things, among them, a ‘pie in the sky’ dream that some critics believe will never happen.
With the gestation of its genesis now going into its eighth year, an overhaul in management last year and perception in some quarters that project owner, Yaqara Group Ltd (YGL), may be a cash-strapped outfit that periodically resorts to the capital markets to raise funds to survive, it may seem likely that the benefit of whatever doubt there is would go in favour of the critics. YGL had been exploring ways within the markets to help it raise parcels of the funds that it needs, an exercise that led to the listing of the company’s B class shares on the South Pacific Stock Exchange in 2005 followed by another fundraising drive via the issuance of convertible notes to an Australian company Pooled Investments Pty Ltd in the same year, with conversion obligations, scheduled to be honoured in January this year, still under negotiation between the two parties.
Its annual report for the financial year ended March 31 2006 saw it reporting an operating loss of F$1.823 million taking the total loss accumulated by the company in its seven-year life to some F$6.696 million.
This was accompanied by a note from independent auditor G. Lal + Co. on the company’s “inherent uncertainty regarding continuation as a going concern”, where, in a nutshell, the accounting company reminded members of YGL that the company’s existence was dependent upon its ability to raise enough capital to bring to reality the range of products that make up the Studio City and further from this, its ability to generate income out of it and make a profit.
Stockholders were reminded that should YGL fail to reach this stage, “it may be required to realize its assets and extinguish its liabilities other than in the normal course of business and at amounts different from those stated in the financial statements”.

Some critics interpreted this extra service by the auditor as confirmation that the company was really in financial distress and that its announcement last month of yet another convertible notes issue – via a rights issue to shareholders including Pooled Investments Pty with the aim to raise up to $4.5 million and this time around, with the official support and partnership of local investment banker Kontiki Capital Ltd, which has agreed to underwrite the issue – was really to help the company keep its head above the water.
But behind the misty curtain of this project, the company’s management is unfazed and believes that with the right combination of management people, strategies, committed investors and partners plus focus and tenacity from all stakeholders, Yaqara Studio City will emerge not only to see the light of day but become a project that Fiji and the Pacific region can be proud of. And that the mere size of it – a value that the company put in today’s dollar terms to be in the vicinity of F$4-F$5 billion – would naturally mean that it would take a while for the project to be realised.
Last month (October), YGL executive chairman Mark Falzon and managing director Lyndon Driscoll held a meeting with representatives from Suva’s brokerage houses to inform them of the company’s developments and to disclose that this latest fundraising exercise is going to be the last in terms of equity input and that the money raised would be used not just to keep the company going but to help in marketing of the residential units under stage one of the project and to put together the final documents needed for stage one of the project to attract debt funding. The company said that Stage one, which is further broken down into three phases of development, consists of some 200 residential units, apartments and foreshore development as well as a Yaqara Yacht Club/Marina and Yaqara Gold Club facilities. The total cost of this stage, Falzon said, is tagged at around F$200 million, funds that the company hopes to take out as a loan from what may be a syndicate of international finance entities seeing that “I’ve got about 20 international investment groups lined up who are very excited about investing in this project”. Falzon said YGL would be using the pre-sale of its residential units as security for the loan.
But in order to secure the pre-sales, the project needs to be marketed and this is one of the areas that part of the F$4.5 million would be put into.

Mark Falzon...YGL executive chairman

“We will put that money (F$4.5 million) into producing feasibility studies, lodgement of the site plans, schematics, the visuals and the contracts as well as marketing materials required to take the project to those clients for them to see and say: ‘gee, I want to buy this unit in that lot and I want it to look like this…a 2-bedroom’. Then we get them to sign a contract, which requires them to put up, say, 10 percent of the cost of that unit and gives them the option to purchase it when it is built. Once we get these pre-sales in place, it would allow us to bring in debt funding which will then allow us to take the first project forward.” Once the F$4.5 million is raised, it may take the company up to 14 months to market and fully sell out the residential units of stage one and get the debt funding, said Falzon, and although it would only need to secure 60 percent of this pre-sale, there has been some indication that the response from the market may be a favourable one.
YGL had tested the waters last year when it released, via its residential sales and marketing company Horizon Sales and Marketing (Fiji) Ltd, 60 purchase options of its Peninsula Apartments. The option contracts were all sold within 10 weeks, according to a company announcement in September last year. As well, some Yaqara Marina berths options had been sold.
But getting Stage One to the point where physical work actually begins would be a thing of certainty once the company is able to secure the debt funding.

Seen in its entirety, appraising such a mammoth project (by Fiji terms) as the Yaqara Studio City could be a daunting task for one not used to visualising projects that has a wide array of products and not limited to the tourist business theme.
The Yaqara Studio City ‘dream’ or ‘impossible dream’, depending upon whom one is talking to, is an attempt to build a city using methods that are guided by the world’s best practices that are environmentally friendly and ecologically sensitive, said Falzon. The aim is to create a community that will live in a setting that supports a vibrant lifestyle and is sustainable. The sugar coating would be what is considered by some as the ‘world’s best tax incentives for financing audio visual productions’ as well as the tax free opportunities associated with a Studio City Zone. Yaqara Studio City has been declared such a “zone”.
With over 5,500 acres of land and foreshore to be developed and turned into what would someday become a city equipped with audio visual production facilities, hotels and premier accommodation facilities, educational institutions, sports facilities and ancillary facilities and services like the yacht club and marina and the golf club, YGL’s management is prepared to be misunderstood by the general public and respect the opinions of critics but not necessarily endorse them.

“It is about strategically unfolding this huge project in a way that makes it sustainable, that makes it realistic, that makes it work,” said Falzon. “There will always be critics but I have complete faith in Fiji’s capacity to make this a reality. It has government support, it has enormous support locally, it has international support and what encourages me more than anything is, when I travel internationally and talk to other groups, the incredible optimism, support and encouragement from visionary organizations and groups that have materialised large-scale projects all around the world. I think we have a committed board and we have a number of committed investors behind it as well as a committed government. A big project like this only happens if you bring people together and stay focussed on the vision and the outcome and you deal with each issue or each problem as it arises along the way. And there will be all sorts of issues and problems along the way. But you don’t let that stop you. You just keep going.”

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NOTE: This article was published as a cover story in the Fiji Business Magazine (www.islandsbusiness.com) as: Yaqara Studio City: A pie in the sky? pp 3-5 November 2006 edition.

Fiji Business is a publication in the Islands Business International portfolio and sold only in the Fiji islands as an accompaniment to Islands Business Magazine.